This reply should bring to an end the uncertainty which has been hanging over Orkney and Shetland while the tender appraisal has dragged on

Tavish Scott, Shetland MSP

The joint venture between CalMac and the Royal Bank of Scotland will build three new ferries to handle the contract, which carries a public subsidy of more than �11m.

The announcement was made in response to a written question from Shetland MSP Tavish Scott, who said: "This reply should bring to an end the uncertainty which has been hanging over Orkney and Shetland while the tender appraisal has dragged on."

But the Liberal Democrat says steps must be taken to protect P&O's existing workforce.

"I understand that, for P&O's officers, crews and shore staff, the uncertainty remains," he said.

"I will be writing to NorthLink asking them to arrange a series of early meetings with the staff and their union representatives, to discuss their plans for staffing the new service.

'Early discussions'

"P&O staff's years of experience of the Northern North Sea and of the needs of Northern Isles customers is too valuable for NorthLink to let slip through their fingers.

"They must enter into early discussions about the transfer to their new service of the existing staff."

Ms Boyack said the executive was committed to maintaining lifeline services to the islands.

"We want to ensure that the links operate in the best interest of the islands and the islanders," she said.

Ferries provide a vital link to the remote islands

"The contract will now be prepared for parliamentary approval, subject to satisfactory conclusion of final discussions in the next few weeks."

The tendering process for the subsidy agreement started in October 1998, with three companies asked to submit bids.

CalMac and the Royal Bank have promised a new and improved timetable, with more sailings and shorter journey times on the routes from Scrabster to Orkney and Aberdeen to Orkney and Shetland.

CalMac managing director Captain John Simkins said: "We are extremely pleased to have been named as preferred bidder."

And the company said it was well advanced in talks with shipyards who have tendered for the contracts to build the three new ships.